Prime Minister Benjamin Netanyahu's cabinet approved the taxation portion of the Trajtenberg report on Sunday, levying heavier taxes on both corporations and the extremely wealthy.

Earlier this month, the cabinet approved in principle the report by the Trajtenberg Committee for socioeconomic change, the result of a social protest movement which swept Israel all summer.

Benjamin Netanyahu speaking during the weekly cabinet meeting in the northern town of Safed October 30, 2011.

The Trajtenberg taxation recommendations, which were voted in unanimously on Sunday, included raising the highest tax bracket from 45% to 48%, as well as raising the tax on interest, dividends, stock market profits by 5%.

An additional tax of 2% will also be levied on those with exceptionally high salaries, and the corporate tax is planned to go from 24% to 25% in 2012.

The report's chapter approved Sunday also included tax breaks for young parents, worth NIS418 for every child under 3 years old, as well as a drop of NIS0.4 in gasoline prices. The benefits are planned to go into effect in 2012.

All of the recommendations approved by the government need to pass in the Knesset as well, where they will go up for a vote toward the end of this year.

Following the cabinet meeting, Netanyahu said that the average Israeli consumer would "feel the government's decision in his wallet," adding that Israel would continue to act responsibly in regards to its budget in order to avoid the global economic downturn."

Prof Manuel Trajtenberg, who headed the government-ordained committee, also commented on the government's approval, saying it constituted an "essential change to the Israeli tax system."